Property Ponzi Pandemonium: Australia’s Fraudulent Financial Fugazi
House prices are pumping because that's what the government wants
Call me crazy, but I don’t believe it’s the role of the Prime Minister of Australia to pump property prices to the moon.
And I certainly don’t believe it’s his role to use your money to do so.
Anthony Albanese’s socialist wet dream came into effect today: using taxpayer funds to help first home buyers leverage into the derelict, overpriced dogboxes in the property market, via a 5% deposit scheme.
Demand has apparently been ‘unprecedented’.
All this scheme will do is push house prices even higher, because it’s increasing demand even more relative to supply.
As I have pointed out multiple times in the past, this was all perfectly predictable.
We already know how this will all play out, because it’s simply an exercise in logical thinking.
Over time, the 5% deposit scheme up to $1.5m (Sydney) will become a 3% deposit scheme up to $2m.
Then 1% up to $2.5m.
Then 0% up to infinity.
You might rightly question: but RA, how will first home buyers afford the mortgage repayments on that? It’s not just about their ability to save for a deposit, but their ability to service the loan?
And if you’re at least asking those questions, you’re a step above the rest.
But here’s the thing: it’s not going to matter.
Why?
Because the government is just going to change the rules in their favour to get the outcome they desire.
They will force the banks to loosen lending standards, then we will get 40 year mortgages, followed by 50 year mortgages, followed by intergenerational mortgages.
And we can also expect the government to take equity in your home in exchange for covering some of the cost (shared equity schemes will rise).
Some of the more astute amongst you may also be questioning: well what about the renters though? If we assume rent goes up as a natural consequence of these policies too, how will the renters afford it?
They won’t.
People will move back in with their parents, or live with more people in less space.
And in addition to this, the government will likely come up with some type of ‘national rent assistance’ - anyone renting will get gifted free fiat.
You might question why I am so confident about all of this.
And just to be clear, I do not expect to be right about all of the specifics of how this will play out, but I will be right about the general direction.
Let me sum up why I believe this:
